Success stories

Aviation and Aerospace to Japan

Trends and opportunities

The market

Japan is the largest, most globalised and most experienced aerospace industrial market in Asia, with a turnover in excess of ¥2 trillion (over A$25 billion) in 2016 (Source: Japan Aerospace Industry 2018-2019, SJAC, JA2018 guide).

Starting with the licensed production of US defence aircraft in post-war years, and later satellites and launch vehicles, the Japanese aerospace industry has built its own capabilities in local design, development and production across virtually all sectors of the aerospace industry. Although the Japanese aerospace industry is still relatively small compared with Europe and the US, it shows good potential for growth in the future – particularly in helicopter maintenance, repair, overhaul and upgrade (MRO&U), business aviation and technologies, and services which complement and enable Japan’s commercial aims in space.

Japan is a major manufacturer of parts, components and systems for the international commercial aviation sector – supplying several Boeing and Airbus aircraft types.

In space, Japan has become a globally recognised player and is aiming to become a major international commercial satellite developer and launch service. Japan’s National Space Agency– JAXA – has repeatedly sought Australian involvement in recovery of its exploratory space missions and views Australia as an attractive destination to test and recover various aerospace systems.

Market Overview

Japan’s increasing concern at what it sees as its deteriorating security environment is leading to record-high defence expenditure. Though most military aerospace procurement is sourced from the US, or produced domestically, Japan is increasingly open to foreign collaboration in international R&D projects – and is also increasingly looking to dual-use technologies from companies abroad that can help innovate new solutions and reduce defence costs.

In the civil sector, Japan continues to be a major supplier and co-development partner to Europe and the US of commercial aviation engine and aircraft parts and components. Japan has increased its participation in international joint development of civil aircraft, and is a 35% partner in the production of the Boeing 787, and a 21% partner of the Boeing 777 and 777X jets (Source: Japan Aerospace Industry 2018-2019, SJAC). Japan is also a major components manufacturer for Airbus, supplying cargo doors, vertical stabilizer structure materials, titanium sheeting, carbon fibre and water tanks, etc. Despite these projects and Japan’s recent foray into the commercial aviation market via the Mitsubishi Regional Jet (Source: Mitsubishi Aerospace Corporation), Japan remains a net importer of aircraft components and parts – importing a total of ¥1.341 trillion (A$17 billion) of engines, airframe parts and engineering parts from the US (74%), EU (16%), and 10% from ASEAN, Canada and others in 2016. (Source: Japan Aerospace Industry 2018-2019, SJAC)

In the space sector, since the first satellite was launched in 1970, Japan has launched more than 224 satellites by the end of 2017 (Source: Directory of Japanese Space Products and Services 2018-2019). These satellites are used for a diverse range of missions, including space science, meteorology, communications, broadcasting, earth observation, navigation and technological experiments. Japan’s space industry is turning its focus from R&D to the commercialisation of space technology. Japan anticipates growing global demand for satellites and aims to export a range of satellites and launch services to global customers, particularly in the Middle East and South East Asia.
A$350 billion has been allocated to Japan’s Mid-Term Defence Program (Japan’s five-year defence acquisition program) out to 2024. Substantial budget allocations are planned for procuring Joint Strike Fighters, developing a range of new advanced missile systems, space related systems, unmanned aerial vehicles, and upgrades and refits to legacy aircraft and mission systems. In December 2018 Japan decided to effectively triple its acquisition of Joint Strike Fighters – up from a previous total of 42 to 147 (Source: Japanese Ministry of Defense).

Opportunities

While most military aircraft production and MRO&U is sourced from the US or domestically, Australian firms engaged in the Joint Strike Fighter program are well positioned to leverage their involvement to build new partnerships with Japanese program participants and pursue broader MRO&U opportunities.

Japan’s heavy industry is also looking to revolutionise its aerospace manufacturing capabilities, maximising the use of artificial intelligence, machine learning, Internet of Things and robotics to reduce cost and manpower inputs.

Collaborative R&D projects with the government and Japanese industry are the best way for Australian SMEs to participate in these opportunities.

Daily maintenance for most civil helicopter operators in Japan is usually conducted in-house, however MRO including engine swap out or exchange-based MRO conducted offshore is a very common practice, and Quality, Cost and Delivery (QCD) and reliability are essential factors to win business.

The Business aviation market of Japan, although historically only a very minor sector of the industry (only 62 registered business aircraft in Japan) is set for growth, driven by the Japanese Government’s target to double foreign visitors to 40 million a year by the 2020 Olympics. There is also a deliberate program of de-regulation making Japan’s international and 84 regional airports much more business aviation-friendly. Infrastructure and services at many regional airports in Japan are also in need of modernising. Companies that have technological solutions to enhance productivity and improve services at airports will be well received.

In space, Japan seeks to become a major exporter of satellites and satellite launch services to the world. A key enabler of this goal will be technologies and services that can provide enhanced space situational awareness and protect various satellites from orbital debris.

Marketing your products and services

Market entry

As the world’s third largest economy and Asia’s largest aerospace industrial market, Japan offers opportunities to Australian SMEs willing to invest in a local presence, partner with local industry or participate collaboratively in global supply chains or international R&D projects.

Tokyo is the centre of politics and business in Japan and should be the first and a regular point of entry for any company wishing to explore the market. Tokyo is serviced by daily flights from Australia into Haneda and Narita international airports.

Key strategies that should be considered when marketing your services/products include:

Localisation is key - Japanese Government foreign procurement is almost wholly conducted through general trading houses – a unique feature of Japan’s commercial landscape. New-to-market Australian companies are advised to connect with a Japanese trading house that has an established reputation. Austrade Japan can arrange tailored introductions.

Invest in building relationships - Japan’s aerospace industrial market is mature, global and has a long history built on extensive personal and organisational linkages. Building these linkages takes time and persistence. Decision making in Japan can take longer than Australian companies and are typically due to different business and cultural norms.

Global supply chain programs – many of the global aerospace primes maintain global supply chain programs that can introduce Australian suppliers to new customers and potential partners in Japan.

Links and industry contacts

The Society of Japanese Aerospace Companies (SJAC) is the sole public entity representing the interests of the Japanese aerospace industry and is comprised of approximately 140 member companies who represent a majority of the firms engaged in the manufacturing, repairing and trading of aircraft, satellite, launch vehicle and related equipment in Japan.

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.